Problem 21–11
ARDUOUS COMPANY
Spreadsheet for the Statement of Cash Flows
Dec.31 Changes Dec. 31
2015 Debits Credits 2016
Balance Sheet
Assets:
Cash 81 (21) 35 116
Liabilities:
Accounts payable 65 (4) 15 50
Shareholders' Equity:
21–82 Intermediate Accounting, 8/e
Problem 21–11 (continued)
Spreadsheet for the Statement of Cash Flows
(continued)
Dec.31 Changes Dec. 31
2015 Debits Credits 2016
Statement of Income
Revenues:
Sales revenue (1) 410 410
X Noncash investing and financing activity.
Problem 21–11 (continued)
Spreadsheet for the Statement of Cash Flows
(continued)
Dec.31 Changes Dec. 31
2015 Debits Credits 2016
Statement of Cash Flows
Operating activities:
Cash inflows:
From customers (1) 414
Net cash flows 82
Investing activities:
Sale of machine components (11) 17
Problem 21–11 (concluded)
ARDUOUS COMPANY
Statement of Cash Flows
For year ended December 31, 2016 ($ in millions)
Cash flows from operating activities:
Cash inflows:
From customers $414
Cash flows from investing activities:
Sale of machine components 17
Cash flows from financing activities:
Retirement of bonds payable (60)
Net increase in cash 35
Problem 21–12
Requirement 1
Retirement of common shares ($ in millions)
Common stock (5 million shares x $1 par per share) ............................... 5
Net income closed to retained earnings
Income summary .............................................................................................. 88
Declaration of a cash dividend
21–86 Intermediate Accounting, 8/e
Problem 21–12 (concluded)
Requirement 2
BRENNER-JUDE CORPORATION
Statement of Retained Earnings
FOR THE YEAR ENDED DECEMBER 31, 2016
($ in millions)
Balance at January 1 $ 90
Problem 21–13
Amount Category
1. Cash collections from customers (direct method). $145,0001 O
1 Summary Entry
2Property, Plant, & Equipment
________________________________________________________________
Beginning balance 247
3 Summary Entry
Accumulated Depreciation
________________________________________________________________
167 Beginning balance
21–88 Intermediate Accounting, 8/e
Problem 21–13 (concluded)
4 Summary Entry
Retained Earnings
_______________________________________________________________
5 Summary Entry
Problem 21–14
SURMISE COMPANY
Spreadsheet for the Statement of Cash Flows
Dec.31 Changes Dec. 31
2015 Debits Credits 2016
Balance Sheet
Assets:
Liabilities:
Accounts payable 32 (7) 15 17
Problem 21–14 (continued)
Spreadsheet for the Statement of Cash Flows
(continued)
Dec.31 Changes Dec. 31
2015 Debits Credits 2016
Statement of Cash Flows
Operating activities:
Net income (1) 50
Problem 21–14 (concluded)
SURMISE COMPANY
Statement of Cash Flows
For year ended December 31, 2016 ($ in millions)
Cash flows from operating activities:
Net income $ 50
Adjustments for noncash effects:
Cash flows from investing activities:
Cash flows from financing activities:
Issuance of note payable 35
Net increase in cash 5
21–92 Intermediate Accounting, 8/e
Problem 21–15
Part A: Assuming both companies use current GAAP, not applying the proposed
Accounting Standards Update for lease accounting described in the Chapter
15 Supplement.
Requirement 1
Digital would report the cash inflow of $28,329,472 from the sale of the bonds as a
cash inflow from financing activities in its statement of cash flows.
June 30, 2016*
Interest expense (6% x $28,329,472) ...................... 1,699,768
December 31, 2016**
Interest expense (6% x [$28,329,472 + 99,768]) ..... 1,705,754
Problem 21–15 (continued)
Requirement 2
Calculation of the present value of lease payments
$391,548 x 15.32380t = $6,000,000
Calculations:
September 30, 2016*
Leased equipment (calculated above) .............................. 6,000,000
Problem 21–15 (continued)
Requirement 3
Digital would report the $6,000,000* direct financing lease of the switching
equipment as a significant noncash investing activity (acquiring one asset and
disposing of another) in the disclosure notes to the financial statements.
Calculations:
September 30, 2016*
December 31, 2016**
Problem 21–15 (continued)
Requirement 4
MDS would report the $6,000,000* sales-type lease of the switching equipment
as a significant noncash activity in the disclosure notes to the financial
statements.
21–96 Intermediate Accounting, 8/e
Problem 21–15 (concluded)
Calculations:
September 30, 2016*
Lease receivable (present value) ....................................... 6,000,000
December 31, 2016**
Problem 21–15 (continued)
Part B: Assuming both companies use the proposed Accounting Standards
Update for lease accounting described in the Chapter 15 Supplement.
Requirement 1
Digital would report the cash inflow of $28,329,472 from the sale of the bonds as a
Problem 21–15 (continued)
Requirement 2
Calculation of the present value of lease payments
$391,548 x 15.32380t = $6,000,000
Calculations:
September 30, 2016*
Problem 21–15 (continued)
Requirement 3
A lessor classifies its cash receipts from lease payments as operating activities
in its statement of cash flows after initially reporting its acquisition of a lease
Calculations:
September 30, 2016*
Lease receivable (PV of lease payments) ......................... 6,000,000
December 31, 2016**
21–100 Intermediate Accounting, 8/e
Problem 21–15 (concluded)
Requirement 4
MDS would report the $6,000,000* lease of the switching equipment as a
noncash transaction in the disclosure notes to the financial statements.
Calculations:
September 30, 2016*
